L B C E X P R E S S H O L D I N G S, I N C. ( f o r m e r l y F E D E R A L R E S O U R C E S L B C H A N G A R, G E N E R A L A V I A T I O N

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1 C O V E R S H E E T SEC Registration Number A S O C O M P A N Y N A M E L B C E X P R E S S H O L D I N G S, I N C. ( f o r m e r l y F E D E R A L R E S O U R C E S I N V E S T M E N T G R O U P I N C. PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province ) L B C H A N G A R, G E N E R A L A V I A T I O N C E N T R E, D O M E S T I C A I R P O R T R O A D, P A S A Y C I T Y Form Type Department requiring the report Secondary License Type, If Applicable Q S E C C O M P A N Y I N F O R M A T I O N Company s Address Company s Telephone Number Mobile Number N/A N/A No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day) Second Monday of June 12/31 CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation Name of Contact Person Address Telephone Number/s Mobile Number Enrique V. Rey evrey@lbcexpress.com CONTACT PERSON s ADDRESS General Aviation Center, Domestic Airport Compound, Pasay City, Metro Manila NOTE 1 : In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated. 2 : All Boxes must be properly and completely filled -up. Failure to do so shall cause the dela y in updating the corporation s records with the Commission and/or non-receipt of Notice of Deficiencies. Further, non -receipt of Notice of Deficiencies shall not excuse the corporation from liability for its deficiencies.

2 SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-Q QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17(2)(b) THEREUNDER 1. For the quarterly period ended: March 31, SEC Identification Number: ASO BIR Taxpayer Identification Number: Exact name of issuer as specified in its charter: LBC EXPRESS HOLDINGS, INC. (formerly FEDERAL RESOURCES INVESTMENT GROUP INC.) 5. Province, country or other jurisdiction of incorporation or organization : Philippines 6. Industry Classification Code: (SEC Use Only) 7. Address of issuer's principal office: LBC Hangar, General Aviation Center, Domestic Airport Road, Pasay City Issuer's telephone number, including area code: (632) Former name, former address and former fiscal year, if changed since last report Federal Resources Investment Group Inc. No. 35 San Antonio Street, San Francisco del Monte, Quezon City Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA As of March 31, 2016: Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding COMMON SHARES 1,425,865, Are any or all of the securities listed on a Stock Exchange? Yes [X] No [ ] Name of Stock Exchange: Philippine Stock Exchange Class of securities listed: Common shares Indicate by check mark whether the registrant: (a) has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or Sections 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation Code of the Philippines, during the preceding twelve (12) months (or for such shorter period the registrant was required to file such reports) Yes [X] No [ ] (b) has been subject to such filing requirements for the past ninety (90) days. Yes[X] No [ ] 1 Inclusive of 1,388,357,471 common shares which are exempt from registration. 2 As of March 31, 2016, 40,899,000 common shares have been listed with Philippine Stock Exchange. The remaining 1,384,966,471 are subject to listing applications filed with the Philippine Stock Exchange.

3 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements The Unaudited Interim Financial Statements of the Company for the period ended March 31, 2016 and Notes to Financial Statements are hereto attached as Annex "A". Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Period ended March 31, 2016 compared to the period ended March 31, 2015 The analyses of consolidated Financial Result of Operation are focused mainly on the result of operation of the subsidiary, LBC Express, Inc. Service Revenues The Company s service revenues increased by the 12.3% to P2,066 million for the period ended March 31, 2016 from P1,839 million for the period ended March 31, 2015, primarily due to an increase in revenues from the Logistics segment attributable to growth in both retail and corporate sales. Logistics Revenues from the Logistics segment grew by 18.8% to P1,750 million for the period ended March 31, 2016 from P1,473 million for the period ended March 31, 2015, primarily due to a growth in the volume and rate of air cargo services rendered. The growth in volume of services was mainly attributable to the horizontal growth of the Company, evidenced by the addition of 71 new branches in the Philippines and one new branch in the Middle East which started operations in between periods March 2015 to This growth also resulted in an increment in the Company s volumes from cargo forwarding services during the year. Price increase is also implemented at an average 7% to 9% for Philippines, effective April, Cost of Services Cost of services improved by 3.3% as to percentage to revenue to 66.3% for the period ended March 31, 2016 from 69.5% for the period ended March 31, Lower ratio for fixed operating costs (e.g staff cost and utilities) is primarily the result of implemented higher price rates for retail cargo products effective April 2015 and improvement in cost of delivery. Gross Profit Gross profit increased by 24% to P697 million for the period ended March 31, 2016 from P560 million for the period ended March 31, 2015, primarily due to the increase in volume and rate of air and courier services and improvement in costs of delivery, salaries and benefits and depreciation expenses.

4 Operating Expenses Operating expenses increased by 20% to P407 million for the period ended March 31, 2016 from P335 million for the period ended March 31, 2015, primarily due to rental of cloud server from IBM and use of network infrastructure from PLDT, in which the Company started incurring expense in April and March 2015, respectively. Salaries and benefits also increased by 12% as a result of higher headcount by 3% to 652 as of March 31, 2016 from 630 as of March 31, 2015, which comprise of organic and inorganic employees. Higher cost is also driven by annual appraisal which is by 5% in average. Higher spending in advertising and promotion by 29% is noted primarily due to the launch of brand ambassador in mid-2015 and higher commitment for other institutional programs. General provisions for claims and losses which is based on 4% of Solutions (Company s business unit for regular corporate accounts) revenue added to the increase in operating expenses. Expansion of Philippine branches and renewal of permits in which tax amount is based on previous year revenue resulted to higher taxes and licenses. Other Income, Net Other income, net which comprise of foreign exchange gain, finance cost, net and other miscellaneous expense increased significantly to P21 million for the period ended March 31, 2016 from P3 million for the period ended March 31, 2015 due to higher earnings from foreign exchange trading. Income before Income Tax Income before income tax increased by 38% to P311 million for the period ended March 31, 2016 from P228 million for the period ended March 31, 2015, primarily due to improvement in revenue and cost of services. FINANCIAL CONDITION As at March 31, 2016 compared to as at December 31, 2015 Assets Current Asset: Cash and cash equivalents decreased by 27% to P714 million as March 31, 2016 from P979 million as of December 31, Trade and other receivables decreased by 5% to P976 million as of March 31, 2016 from P1,025 million as of December , primarily due to off-peak season for corporate accounts. Due from related parties increased by 10% to P1,942 million as of March 31, 2016 from P1,763 million as of December 31, 2015, primarily due to net advances to LBC Development amounting to P30.8 million and to Lovable Commerce, Inc. amounting to P19 million. In addition, outstanding

5 billings to entities under common control related to normal operations (e.g. brokerage, shared service costs, delivery fees,) increased by 19% as of quarter end. Prepayments and other current assets decreased by 31% to P304 million as of March 31, 2016 from P443 million as of December 31, 2015, primarily due to lifting of the restriction of cash as presented in the prior year financial statements amounting to P135 million. Non-current Assets Property and equipment. net, increased by 3% to P783 million as of March 31, 2016 from P763 million as of December 31, 2015, primarily due to business expansion which led to acquisitions for leasehold improvements which increased by 4% and construction in progress by 42% at book value. Available for sale investment, increased by 28% to P273 million as of March 31, 2016 from P212 million as of December 31, 2015 due to higher market price from P1.09/share to P1.40/share. Deferred tax assets, net, increased by 5% to P236 million as of March 31, 2016 from P227 million as of December 31, 2015 as a result of higher non-deductible expenses from retirement benefit and allowance for doubtful accounts. Security deposits, increased by 2% to P214 million as of March 31, 2016 from P209 million as of December , primarily due to increase in branches during the quarter. Liabilities Current Liabilities Accounts payable and accrued expenses decreased by 1% to P1,814 million as of March 31, 2016 from P1,830 million as of December , primarily due to lower outstanding payable for taxes e.g withholding taxes, final taxes and VAT. Income tax payable increased by 63% to P212 million as of March 31, 2016 from P131 million as of December 31, in line with the growth in operating income subject to income taxes. Notes payable decreased by 38% to million as of March 31, 2016 from 1,041.6 million as of December 31, 2015, primarily attributable to maturity and payment of notes payable to three major banks during the period. Transmission liability decreased by 25% to P380 million as of March 31, 2016 from P508 million as of December 31, 2015, primarily due to higher volume and amount of money remittance transactions for the last day of the operations of the period. Current portion of finance lease liabilities decreased by 51% to P21 million as of March 31, 2016 from P43 million as of December 31, 2015 due to amortization of existing leases. Non-current Liabilities Retirement benefit obligation increased by 4% to P667 million as of March 31, 2016 from P641 million as of December due to retirement benefit expense for the period. LIQUIDITY Cash Flows Period ended March 31, 2016 compared to the period ended March 31, 2015.

6 Cash flow from operating activities The Company's net cash from operating activities is primarily affected by income before income tax, depreciation and amortization, retirement benefit expense, interest expense and changes in working capital. The Company's net cash from operating activities were P241 million, and P224 million for the period ended March 31, 2016 and 2015, respectively. For the period ended March 31, 2016, cash flow from operating activities were generally derived from the normal operations which increased by 20% as compared to the amount generated for the period ended March 31, Cash flows from investing activities Cash used investing activities for the period ended March 31, 2016 and 2015 were P80 million and P97 million, respectively. Additions to property and equipment, as part of the expansion, had the largest impact on cash flow from investing activities for the period ended March 31, Cash flow from financing activities Cash outflow from financing activities for the period ended March 31, 2016 and 2015 were P428 million and P76 million, respectively. Net payment of loans is higher in current period by P330 million.

7 PART II -- OTHER INFORMATION There is no other information not previously reported in SEC Form 17-C that needs to be reported in this section.

8 SIGNATURES Pursuant to the requirements of the Securities Regulation Code, the Issuer has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. LBC EXPRESS HOLDINGS, INC. ENRIQUE V. REY JR. OIC - Chief Financial Officer and Treasurer May 11, 2016

9 LBC EXPRESS HOLDINGS, INC. AND SUBSIDIARIES (formerly known as Federal Resources Investment Group Inc.) Unaudited Interim Consolidated Financial Statements As at March 31, 2016 and for the Three Months Ended March 31, 2016 and 2015 (With Comparative Audited Consolidated Statement of Financial Position as at December 31, 2015)

10 LBC EXPRESS HOLDINGS, INC. AND SUBSIDIARIES (Formerly known as FEDERAL RESOURCES INVESTMENT GROUP INC.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (With Comparative Audited Figures as at December 31, 2015) March 31, December 31, (Unaudited) (Audited) ASSETS Current Assets Cash and cash equivalents (Note 3, 20 and 21) P=714,778,742 P=979,102,489 Trade and other receivables (Notes 4, 20 and 21) 976,209,867 1,025,059,428 Due from related parties (Notes 13, 20 and 21) 1,942,871,415 1,763,046,757 Prepayments and other current assets (Notes 5) 304,788, ,304,439 Total Current Assets 3,938,648,379 4,210,513,113 Noncurrent Assets Property and equipment (Note 6) 783,700, ,022,204 Intangible assets (Note 7) 272,565, ,381,485 Available-for-sale investment (Notes 8, 20 and 21) 273,060, ,596,951 Deferred tax asset (Note 17) 235,830, ,645,084 Security deposits (Notes 18, 20 and 21) 214,237, ,930,934 Other noncurrent assets (Note 5) 61,816,371 61,806,091 Total Noncurrent Assets 1,841,211,314 1,749,382,749 P=5,779,859,693 P=5,959,895,862 LIABILITIES AND EQUITY Current Liabilities Accounts payable and accrued expenses (Notes 9, 20 and 21) P=1,814,384,764 P=1,830,208,144 Due to a related party (Notes 13, 20 and 21) 20,032,428 19,966,251 Notes payable (Notes 11, 20 and 21) 647,591,394 1,040,617,833 Transmissions liability (Notes 10, 20 and 21) 380,952, ,139,757 Income tax payable 212,550, ,683,165 Current portion of lease liabilities (Notes 18, 20 and 21) 21,170,594 43,049,537 Total Current Liabilities 3,096,682,386 3,572,664,687 Noncurrent Liabilities Retirement benefit liability (Note 19) 667,322, ,812,079 Lease liabilities (Notes 18, 20 and 21) 73,353,100 74,164,341 Other noncurrent liabilities 43,553,548 43,553,548 Total Noncurrent Liabilities 784,229, ,529,968 3,880,911,662 4,332,194,655 Equity Equity attributable to shareholders of the Parent Company Capital stock (Note 12) 1,425,865,471 1,425,865,471 Retained earnings (Note 12) 388,455, ,498,871 Accumulated comprehensive income 122,611,017 68,411,150 1,936,932,239 1,668,775,492 Non-controlling interests (37,984,208) (41,074,285) Total Equity 1,898,948,031 1,627,701,207 P=5,779,859,693 P=5,959,895,862 See accompanying Notes to Interim Condensed Consolidated Financial Statements.

11 LBC EXPRESS HOLDINGS, INC. AND SUBSIDIARIES (Formerly known as FEDERAL RESOURCES INVESTMENT GROUP INC.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Three Months Ended March (Unaudited) (Unaudited) REVENUE Service fees (Note 22) P=2,066,476,644 P=1,839,499,645 COST OF SERVICES (Note 14) 1,369,072,457 1,279,280,679 GROSS PROFIT 697,404, ,218,966 OPERATING EXPENSES (Note 15) 407,530, ,234,293 OTHER INCOME (CHARGES) Foreign exchange gains - net (Note 20) 32,042,499 11,512,427 Interest income 736, ,757 Interest expense (Notes 11) (12,172,860) (8,135,530) Others - net (Note 16) 91,105 (379,497) 20,696,765 3,576,157 INCOME BEFORE INCOME TAX 310,570, ,560,830 PROVISION FOR INCOME TAX (Note 17) (93,166,030) (124,405,202) NET INCOME FOR THE PERIOD 217,404, ,155,628 OTHER COMPREHENSIVE INCOME (LOSS) Items not to be reclassified to profit or loss in subsequent periods Remeasurement gain on retirement benefit plan - net of tax (10,385,168) (10,248,922) Items that may be reclassified to profit or loss in subsequent periods Unrealized fair value gain (loss) on available-for-sale 60,463,353 (13,653,015) investment (Note 8) Currency translation loss - net 2,589,887 2,097,848 52,668,072 (21,804,089) TOTAL COMPREHENSIVE INCOME FOR THE PERIOD P=270,072,366 P=82,351,539 NET INCOME (LOSS) ATTRIBUTABLE TO: Shareholders of the Parent Company P=213,956,879 P=112,054,344 Non-controlling interests 3,447,414 (7,898,716) NET INCOME FOR THE PERIOD P=217,404,294 P=104,155,628 TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Shareholders of the Parent Company P=266,982,289 P=91,001,845 Non-controlling interests 3,090,077 (8,650,306) TOTAL COMPREHENSIVE INCOME FOR THE PERIOD P=270,072,366 P=82,351,539 BASIC/DILUTED EARNINGS PER SHARE (Note 23) P=0.15 P=0.08 See accompanying Notes to Interim Condensed Consolidated Financial Statements.

12 LBC EXPRESS HOLDINGS, INC. AND SUBSIDIARIES (Formerly known as FEDERAL RESOURCES INVESTMENT GROUP INC.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Capital Stock (Note 12) Retained Earnings Accumulated comprehensive income (loss) (Notes 8) Total Non-controlling interests Total equity For the Three Months Ended March 31, 2016 (Unaudited) Balances as at January 1, 2016 P=1,425,865,471 P=174,498,871 P=68,411,150 P=1,668,775,492 (P=41,074,285) P=1,627,701,207 Comprehensive income: Net income 213,956, ,956,880 3,447, ,404,294 Other comprehensive loss 54,199,867 54,199,867 (357,337) 53,842,530 Total comprehensive income (loss) 213,956,880 54,199, ,156,747 3,090, ,246,824 Balances as at March 31, 2016 P=1,425,865,471 P=388,455,751 P=122,611,017 P=1,936,932,239 (P=37,984,208) P=1,898,948,031 See accompanying Notes to Interim Condensed Consolidated Financial Statements. Capital Stock (Note 13) Additional Paid-In- Capital (Note 13) Retained Earnings (Note 13) Accumulated Comprehensive Income (Loss) (Notes 9, 13 and 20) Equity Reserve (Note 2) Total Non-controlling Interests Total Equity For the Three Months Ended March 31, 2015 (Unaudited) Balances as of January 1, 2015 P=40,899,000 P=71,081,190 P=133,861,985 P=164,748,060 P=929,200,314 P=1,339,790,549 (P=13,925,063) P=1,325,865,486 Comprehensive income: Net income (loss) 112,054, ,054,344 (7,898,716) 104,155,628 Other comprehensive loss (20,272,293) (20,272,293) (751,590) (21,023,883) Total comprehensive income (loss) 112,054,344 (20,272,293) 91,782,051 (8,650,306) 83,131,745 Decrease in non-controlling interest (2,106,770) (2,106,770) Balances as of December 31, 2015 P=40,899,000 P=71,081,190 P=245,916,329 P=144,475,767 P=929,200,314 P=1,431,572,600 (P=24,682,139) P=1,406,890,461 See accompanying Notes to Interim Condensed Consolidated Financial Statements.

13 LBC EXPRESS HOLDINGS, INC. AND SUBSIDIARIES (Formerly known as FEDERAL RESOURCES INVESTMENT GROUP INC.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March (Unaudited) 2015 (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=310,570,323 P=228,560,830 Adjustments for: Depreciation and amortization (Notes 6 and 7) 63,480,379 71,201,119 Retirement benefit expense net of benefits paid and contribution to retirement plan (Notes 14 and 15) 15,125,381 26,386,304 Interest expense (Notes 11) 12,172,860 8,135,530 Unrealized foreign exchange losses (gains) 363,573 Interest income (736,021) (578,757) Loss on disposal of property and equipment (Note 6) (69,423) Operating income before changes in working capital 400,907, ,705,026 Changes in working capital: Decrease (increase) in: Trade and other receivables 48,849,561 86,250,247 Due from related parties (184,740,286) (578,579,194) Prepayments and other assets 138,505,805 39,503,800 Security deposits (4,306,999) (7,557,461) Increase in: Accounts payable and accrued expenses (15,823,382) 76,559,386 Due to a related party 4,981,805 (6,909,117) Transmissions liability (127,187,233) 280,813,903 Net cash generated from operations 261,186, ,786,590 Interest received 736, ,757 Income tax paid (including creditable withholding taxes) (17,019,104) Net cash provided by operating activities 244,903, ,365,347 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of property and equipment (Notes 6 and 25) (79,195,722) (83,206,410) Additions to intangible assets (Note 7) (1,261,575) (13,517,104) Proceeds from disposal of property and equipment 183,500 Net cash used in investing activities (80,273,797) (96,723,514) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from notes payable 310,848, ,280,000 Payments of notes payable (703,875,000) (714,780,000) Interest paid (12,172,860) (8,135,530) Payments of lease liabilities (22,690,184) (5,803,167) Net cash generated from financing activities (427,889,483) (76,438,697) EFFECT OF FOREIGN CURRENCY EXCHANGE RATE (1,063,727) (3,538,459) CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS (264,323,747) 47,664,677 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 979,102, ,891,420 CASH AND CASH EQUIVALENTS AT END OF PERIOD P=714,778,742 P=575,556,097 See accompanying Notes to Interim Condensed Consolidated Financial Statements.

14 LBC EXPRESS HOLDINGS, INC. AND SUBSIDIARIES (Formerly known as FEDERAL RESOURCES INVESTMENT GROUP INC.) NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Corporate Information LBC Express Holdings, Inc. (referred to as the Parent Company or LBCH ), formerly Federal Resources Investment Group Inc. (FED), was registered with the Securities and Exchange Commission (SEC) on July 12, The ultimate parent of the Parent Company is LBC Development Corporation (LBCDC). The Parent Company undertook an Initial Public Offering and on December 21, 2001 LBCH s shares were listed on the Philippine Stock Exchange (PSE). The Parent Company invests, purchases or disposes real and personal property of every kind and description, including shares of stock, bonds, debentures, notes, evidences of indebtedness, and other securities or obligations of any corporation, association, domestic and foreign. The Parent Company is a public holding company with investments in transportation business which includes regular pick-up and delivery services on sea and air freight shipments, both incoming and outgoing with necessary storage, brokerage, transportation and allied facilities. The Parent Company and its subsidiaries (collectively referred to as the Group ) also holds a license from the Bangko Sentral ng Pilipinas (BSP) to operate as remittance agent, where it offers to remit, transfer or transmit money on behalf of any person to another person and/or entity. The previous registered office and principal place of business of the Parent Company was at No. 35 San Antonio Street, San Francisco Del Monte, Quezon City. On October 12, 2015, the SEC approved the change in principal office of the Parent Company to LBC Hangar, General Aviation Centre, Domestic Airport Road, Pasay City, Metro Manila, Philippines. On April 23, 2015, the Board of Directors (BOD) of Parent Company approved the issuance of 59,101,000 common shares, at P1.00 per share, out of the unissued portion of the Parent Company s authorized capital stock to LBCDC. On May 18, 2015, Parent Company and LBCDC entered into a Deed of Subscription, whereby LBCDC, subject to the completion of the mandatory tender offer, subscribed to 59,101,000 common shares out of the unissued authorized capital stock of Parent Company or approximately 59.10% of the total authorized capital stock of Parent Company, by applying the deposits for future stocks subscription made by LBCDC amounting to P59,101,000 on April 22, 2015, as the consideration for the subscribed shares at one peso (P1.00) per share. Accordingly, on the same date, Parent Company s previous officers and directors resigned from their respective positions and majority were replaced by the representatives from LBCDC. On May 18, 2015, a former stockholder entered into a Deed of Assumption of Advances with LBCDC; wherein, LBCDC agreed to assume the cash advances from Parent Company by a former stockholder which transpired on April 28, 2015 amounting to P58,805,165. Accordingly, Parent Company agreed to such assumption. On May 22, 2015, LBCDC filed with the SEC its mandatory tender offer report for all the outstanding shares of the Company for a tender offer price of one peso (P1.00) per share. The

15 mandatory tender offer period commenced on June 8, 2015 and ended on July 7, 2015, during which period, none of the Tender Offer Shares were tendered by the shareholders of the Parent Company. On July 14, 2015, LBCDC filed with the SEC its final tender offer report. With the completion of the Tender Offer, LBCDC now owns 59,101,000 common shares representing approximately 59.10% of the issued and outstanding and authorized capital stock of the Parent Company. On July 22, 2015, the Parent Company issued the stock certificates to LBCDC covering the 59,101,000 common shares subject of the said subscription. On July 29, 2015 and September 4, 2015, the BOD and stockholders, respectively, approved the following resolutions on the amendment to Charter, By-Laws and other documents: The change in the name of Parent Company to LBC Express Holdings, Inc. ; The amendment of the secondary purpose of Parent Company which is primarily to align the purpose to that of a holding company; The transfer of Parent Company s principal office address to LBC Hangar, General Aviation Centre, Domestic Airport Road, Pasay City, Metro Manila, Philippines; The increase in the number of directors of Parent Company from seven to nine; The increase in the authorized capital stock of Parent Company from P100,000,000 divided into 100,000,000 shares with par value of P1.00 per share up to P3,000,000,000 divided into 3,000,000,000 shares with par value of P1.00 per share; The change in the fiscal year of Parent Company from calendar year to first day of December of each year to the last day of November of the succeeding year; and The definition of dividends. On July 29, 2015, the BOD approved the change of the trading symbol of the Parent Company s shares in the PSE from FED to LBC. On September 18, 2015, the BOD determined and fixed the amount of the increase in authorized capital stock of Parent Company from 100,000,000P divided into 100,000,000 shares with par value of 1P.00 per share to P2,000,000,000 divided into 2,000,000,000 with par value of P1.00 per share, and authorized the filing of the increase in authorized capital stock with the SEC. Moreover, the BOD of Parent Company, in meetings held on July 29, 2015, September 18, 2015 and October 2, 2015, as relevant, and the stockholders of Parent Company in the annual general meeting held on September 4, 2015, also approved among others the following transactions: The acquisition by Parent Company of 1,041,180,493 issued and outstanding shares of LBC Express, Inc. (LBCE) at a book value as reflected in the consolidated audited financial statements of LBCE as of November 30, 2014, which book value shall not be less than P1,000,000,000 or such other consideration and under such terms and conditions as management may deem beneficial to the interest of the Parent Company; The issuance of 475,000,000 new Parent Company shares to LBCDC at the subscription price of P1.00 per share out of the increase in authorized capital stock from P100,000,000 to P2,000,000,000; The issuance of 671,873,632 new Parent Company shares to LBCDC out of the increase in authorized capital stock, immediately following the approval by the SEC of the increase in authorized capital stock at the subscription price of P1.00 per share, under such terms and conditions as management may deem beneficial; The issuance of (i) 59,663,947 shares to Vittorio Lim, (ii) 59,663,946 shares to Mariano D. Martinez, Jr. and (iii) 59,663,946 shares to Lowell L. Yu, or an aggregate of 178,991,839 common shares, from the unissued authorized capital stock of Parent Company, immediately following the approval by the SEC of the increase in authorized capital stock at the

16 subscription price of P1.00 per share, under such terms and conditions as management may deem beneficial; The foregoing issuances of stocks to LBCDC and/or other investors and/or third parties (with reference to LBCDC or LBCE) was for the purpose of: - Primarily funding the acquisition by Parent Company of LBCE; - Funding the acquisition of other potential investments, whether or not related to the business of LBCE; and - Ensuring compliance by Parent Company with the minimum public ownership requirements of the PSE. On September 18, 2015, LBCDC subscribed to additional 671,873,632 common shares out of the unissued capital stock of Parent Company at the subscription price of P1.00 per share, in exchange for cash, conditioned upon and effective immediately following the approval by the SEC of the increase in authorized capital stock. On the same date, LBCDC subscribed to additional 671,873,632 common shares out of the unissued capital stock of the Parent Company at the subscription price of P1.00 per share, in exchange for cash, conditioned upon and effective immediately following the approval by the SEC of the increase in authorized capital stock. On September 22, 2015, Parent Company submitted an application for the increase in authorized capital stock from one hundred million pesos (P100,000,000) divided into one hundred million (100,000,000) shares with par value of one peso (P1.00) per share to two billion pesos (P2,000,000,000) divided into two billion number of shares with par value of one peso (P1.00) per share. On the same date, the amendments to the Articles of Incorporation of Parent Company and By-Laws, except for the change in fiscal year, were likewise submitted to the SEC. In a Deed of Transfer dated September 24, 2015, Parent Company purchased from LBCDC the shares of stock of LBCE at a total cash consideration of P1,384,670,966. It was also previously agreed that Parent Company s advances payable by LBCDC amounting to P58,805,495 will be set-off against the remaining unpaid balance. On October 2, 2015, certain individuals subscribed to a total of 178,991,839 common shares out of the unissued capital stock of Parent Company at the subscription price of P1.00 per share, in exchange for cash, conditioned upon and effective immediately following the approval by the SEC of the increase in authorized capital stock. On October 12, 2015, SEC approved the increase in authorized capital stock of Parent Company. On the same date, SEC issued a certificate of filing of Parent Company s amended Articles of Incorporation and amended By-Laws. On October 16, 2015, the Parent Company issued the stock certificates to LBCDC covering the 1,146,873,632 common shares while on October 21, 2015 the Parent Company issued the stock certificates to certain individuals covering 178,991,839 common shares.

17 2. Summary of Significant Accounting Policies Basis of Preparation The interim consolidated financial statements have been prepared using the historical cost basis, except for available-for-sale (AFS) investment that has been measured at fair value. The interim consolidated financial statements are presented in Philippine Peso. All amounts are rounded off to the nearest peso, except when otherwise indicated. Difference in accounting periods The Group consolidated the non-coterminous financial statements of its subsidiaries using their November 30 fiscal year end financial statements since it is impracticable for the said subsidiaries to prepare financial statements as of the same date as the reporting date of the Parent Company. Management exercised judgment in determining whether adjustments should be made in the consolidated financial statements of the Group pertaining to the effects of significant transactions or events of the fiscal subsidiaries that occur between the first quarter end, February 29 and the date of the Parent Company s financial statements and between November 30 and the comparative date of the Parent Company s financial position. There were no significant transactions that transpired between March 1, 2016 to March 31, 2016 and between December 1, 2015 to December 31, Reverse acquisition On September 24, 2015, the Parent Company completed the acquisition of LBCE through a cash transaction (see Note 1). For accounting purposes, the transaction was accounted for similar to a reverse acquisition following Philippine Financial Reporting Standard (PFRS) 3, Business Combination. LBCE was deemed to be the accounting acquirer under the principles of PFRS 3. In a reverse acquisition, the legal acquirer is identified as the acquiree for accounting purposes because based on the substance of the transaction, the legal acquiree is adjudged to be the entity that gained control over the legal acquirer. Accordingly, the consolidated financial statements of the Group have been prepared as a continuation of the consolidated financial statements of LBCE. The comparative December 31, 2014 information presented in the consolidated financial statements are those of LBCE and not those originally presented in the previous 2014 financial statements of the Parent Company (accounting acquiree) with its old businesses. Because the consolidated financial statements represent a continuation of the consolidated financial statements of LBCE, except for their capital structure, the consolidation will reflect the following: Before the asset purchase transaction (as at and for the year ended December 31, 2014) a) the assets and liabilities of LBCE recognized and measure at their carrying amounts, not at their acquisition-date fair values b) the retained earnings and other equity balances are that of LBCE; c) the total equity is that of LBC Group but the legal capital (common shares) would be that of Parent Company; d) the resulting equity reserve represents (1) the legal capital of LBC Group; and (2) the retained earnings and other equity balances (other than the legal capital) of Parent Company before common control; and e) the consolidated statement of comprehensive income reflects that of LBCE for the full period and that of LBCE from the date of incorporation.

18 After the asset purchase transaction a) the transferred assets and liabilities of LBC Group recognized and measured at their precombination carrying amounts, not at their acquisition-date fair values; b) legal capital of the Parent Company; c) the retained earnings of LBCE as of December 1, 2014 and accumulated comprehensive income of the Parent Company from July 22, 2015 to December 31, 2015 and LBCE from December 1, 2014 to November 30, 2015; d) the consolidated statement of comprehensive income reflected that of LBCE from December 1, 2014 to November 30, 2015, and the statement of comprehensive income of the Parent Company from July 22, 2015 to December 31, Impact of the share purchase agreement which was executed on September 14, 2015 to the consolidated financial statements The effect of the execution of the deed of transfer was reflected in the consolidated financial statements as movement in equity, as follows: Investment recognized by the Parent Company P=1,384,670,966 Net assets of the Parent Company 875,659 P=1,383,795,307 The effect of pooling of interest method of P=1, million is applied against net available APIC of P=55.42 million, the remaining amount of P= million is applied against retained earnings. The rollforward analysis of Equity Reserve are as follows: As of December 31, ,200,314 Effect of pooling-of-interest method (1,383,795,307) Total (454,594,993) Closed to APIC 55,420,327 Closed to retained earnings 399,174,666 As of December 31, 2015 P= The accounting similar to a reverse acquisition applies only to the consolidated financial statements. The Parent Company financial statements will continue to represent LBC Express Holdings Inc. as a stand-alone entity. Statement of Compliance The accompanying interim consolidated financial statements of the Group have been prepared in accordance with the Philippine Accounting Standard 34, Interim Financial Reporting. Accordingly, the interim condensed consolidated financial statements do not include all the information and disclosures required in the annual audited consolidated financial statements as at and for the year ended December 31, 2015, which have been prepared in accordance with Philippine Financial Reporting Standards (PFRS).

19 Basis of Consolidation The interim consolidated financial statements include the accounts of the Parent Company and all of its subsidiaries where the Parent Company has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee) Exposure, or rights, to variable returns from its involvement with the investee, and The ability to use its power over the investee to affect its returns When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: The contractual arrangement with the other vote holders of the investee Rights arising from other contractual arrangements The Group s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. All significant intercompany balances and transactions, including income, expenses and dividends, are eliminated in full. Profit and losses resulting from intercompany transactions that are recognized in assets are eliminated in full. There were no changes in the Parent Company s ownership interests in its subsidiaries from January 1, 2016 to March 31, Changes in Accounting Policies and Disclosures The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group s annual consolidated financial statements as at and for the year ended December 31, 2015, except for the following amendments which the Group adopted starting January 1, Except as otherwise indicated, the adoption of these amendments have no material impact on the Company s financial statements: PFRS 9, Financial Instruments - Classification and Measurement (2010 version) PFRS 9 (2010 version) reflects the first phase on the replacement of PAS 39 and applies to the classification and measurement of financial assets and liabilities as defined in PAS 39, Financial Instruments: Recognition and Measurement. PFRS 9 requires all financial assets to be measured at fair value at initial recognition. A debt financial asset may, if the fair value option (FVO) is not invoked, be subsequently measured at amortized cost if it is held within a business model that has the objective to hold the assets to collect the contractual cash flows and its contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal outstanding. All other debt instruments are subsequently measured at fair value through profit or loss. All equity financial assets are measured at fair value either through other comprehensive income (OCI) or profit or loss. Equity financial assets held for trading must be measured at fair value through profit or loss. For FVO liabilities, the amount of change in the fair value of a liability that is attributable to changes in credit risk must be presented in OCI. The remainder of the change in fair value is presented in profit or loss, unless presentation of the fair value change in respect of the liability s credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. All other PAS 39 classification and measurement requirements for financial liabilities have been

20 carried forward into PFRS 9, including the embedded derivative separation rules and the criteria for using the FVO. The Group did not adopt the standard before the completion of the limited amendments and the second phase of the project. PFRS 9 (2010 version) is effective for annual periods beginning on or after January 1, This mandatory adoption date was moved to January 1, 2018 when the final version of PFRS 9 was adopted by the Philippine Financial Reporting Standards Council (FRSC). Such adoption, however, is still for approval by the Board of Accountancy (BOA). In compliance with SEC Memorandum Circular No. 3, Series of 2012, the Company has conducted a study on the impact of an early adoption of PFRS 9. After careful consideration of the results on the impact of evaluation, the Group has decided not to early adopt PFRS 9 for its interim reporting. Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate This interpretation covers accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The SEC and the FRSC have deferred the effectivity of this interpretation until the final Revenue standard is issued by the IASB and an evaluation of the requirements of the final Revenue standard against the practices of the Philippine real estate industry is completed. Adoption of the interpretation when it becomes effective will not have any impact on the consolidated financial statements of the Group. The following new standards and amendments issued by the IASB were already adopted by the FRSC but are still for approval by BOA: Effective January 1, 2015 PAS 19, Employee Benefits, Defined Benefit Plans: Employee Contributions (Amendments) PAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognize such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment is effective for annual periods beginning on or after January 1, It is not expected that this amendment would be relevant to the Group, since the Group has no defined benefit plans with contributions from employees or third parties. Effective January 1, 2016 PAS 16, Property, Plant and Equipment and PAS 38, Intangible Assets - Clarification of Acceptable Methods of Depreciation and Amortization (Amendments) The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenuebased method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortize intangible assets. The amendments are effective prospectively for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group given that the Group has not used a revenue-based method to depreciate its non-current assets. PAS 16, Property, Plant and Equipment and PAS 41, Agriculture - Bearer Plants (Amendments)

21 The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. Under the amendments, biological assets that meet the definition of bearer plants will no longer be within the scope of PAS 41. Instead, PAS 16 will apply. After initial recognition, bearer plants will be measured under PAS 16 at accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). The amendments also require that produce that grows on bearer plants will remain in the scope of PAS 41 measured at fair value less costs to sell. For government grants related to bearer plants, PAS 20, Accounting for Government Grants and Disclosure of Government Assistance, will apply. The amendments are retrospectively effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as the Group does not have any bearer plants. PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements (Amendments) The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. Entities already applying PFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively. For first-time adopters of PFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to PFRS. The amendments are effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact on the Group s consolidated financial statements. PFRS 10, Consolidated Financial Statements and PAS 28, Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture These amendments address an acknowledged inconsistency between the requirements in PFRS 10 and those in PAS 28 (2011) in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. These amendments are effective from annual periods beginning on or after 1 January PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations (Amendments) The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the activity of the joint operation constitutes a business must apply the relevant PFRS 3 principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to PFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party. The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are prospectively effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group. PFRS 14, Regulatory Deferral Accounts PFRS 14 is an optional standard that allows an entity, whose activities are subject to rateregulation, to continue applying most of its existing accounting policies for regulatory deferral account balances upon its first-time adoption of PFRS. Entities that adopt PFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financial position and present movements in these account balances as separate line items in the statement of profit or

22 loss and other comprehensive income. The standard requires disclosures on the nature of, and risks associated with, the entity s rate-regulation and the effects of that rate-regulation on its financial statements. PFRS 14 is effective for annual periods beginning on or after January 1, Since the Group is a PFRS preparer, this standard would not apply. Annual Improvements to PFRSs ( cycle) The Annual Improvements to PFRSs ( cycle) are effective for annual periods beginning on or after January 1, 2016 and are not expected to have a material impact on the Group. They include: PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in Methods of Disposal The amendment is applied prospectively and clarifies that changing from a disposal through sale to a disposal through distribution to owners and vice-versa should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no interruption of the application of the requirements in PFRS 5. The amendment also clarifies that changing the disposal method does not change the date of classification. PFRS 7, Financial Instruments: Disclosures - Servicing Contracts PFRS 7 requires an entity to provide disclosures for any continuing involvement in a transferred asset that is derecognized in its entirety. The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance in PFRS 7 in order to assess whether the disclosures are required. The amendment is to be applied such that the assessment of which servicing contracts constitute continuing involvement will need to be done retrospectively. However, comparative disclosures are not required to be provided for any period beginning before the annual period in which the entity first applies the amendments. PFRS 7 - Applicability of the Amendments to PFRS 7 to Interim Financial Statements This amendment is applied retrospectively and clarifies that the disclosures on offsetting of financial assets and financial liabilities are not required in the interim financial report unless they provide a significant update to the information reported in the most recent annual report. PAS 19, Employee Benefits - regional market issue regarding discount rate This amendment is applied prospectively and clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. PAS 34, Interim Financial Reporting - disclosure of information elsewhere in the interim financial report The amendment is applied retrospectively and clarifies that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). Effective January 1, 2018 PFRS 9, Financial Instruments - Hedge Accounting and amendments to PFRS 9, PFRS 7 and PAS 39 (2013 version) PFRS 9 (2013 version) already includes the third phase of the project to replace PAS 39 which pertains to hedge accounting. This version of PFRS 9 replaces the rules-based hedge accounting model of PAS 39 with a more principles-based approach. Changes include replacing the rulesbased hedge effectiveness test with an objectives-based test that focuses on the economic relationship between the hedged item and the hedging instrument, and the effect of credit risk on